The CFPB Process Is A Direct Route To Quality.
In addition, on April 13, 2012, the CFPB issued a service provider bulletin detailing the relationship between lenders, their service providers and the CFPB’s regulatory authority over them. The CFPB is authorized to examine and obtain reports from supervised banks and non-banks for compliance with federal consumer financial law, and to exercise enforcement when it identifies violations of the law. The CFPB expects supervised banks and non banks to have an effective process for managing the risks of service provider relationships. To limit the potential for statutory or regulatory violations and related consumer harm, the CFPB expect lenders to take the following steps:
- Conducting thorough due diligence to verify that the service provider understands and is capable of complying with federal consumer financial law
- Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents who have consumer contact or compliance responsibilities
- Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities, including engaging in unfair, deceptive or abusive acts or practices
- Establishing internal controls and ongoing monitoring to determine whether the service provider is complying with federal consumer financial law
- Taking prompt action to fully address any problems identified through the monitoring process, including terminating the relationship where appropriate